How did Marc Tellier last this long at Yellow Media?

It must be something they teach to PR strategists. Having half of the country's business reporters locked up in a dingy Ottawa conference hall to decipher the federal budget is an ideal moment to announce that your CEO is, um, "departing."

On budget day last year, Jim Balsillie left the board of Research in Motion while the Montreal Canadiens fired their general manager, Pierre Gauthier.

Thursday, it was Yellow Media Ltd.'s turn to announce that its president and chief executive officer, Marc Tellier, was leaving the Montreal-based publisher.

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In Canadian business circles, this was the equivalent of the Caramilk secret, a longstanding and unresolvable mystery. How has Mr. Tellier lasted this long? After all, the company's problems have been a decade in the making.

It is an unwritten rule that you don't kick someone when they're down. But it is worth recounting how the company was run to the ground and ended up in the hands of its creditors following a restructuring that wiped out shareholders.

In the 2000s, Yellow Media bought just about every telephone-book publisher in the country even if it knew full well that the yellow pages were doomed in the digital age. And in this $4.5-billion acquisition spree, no publisher was too expensive – not even Advertising Directory Solutions, a $2.5-billion acquisition on which Bain Capital made a killing with a 28-per-cent return in just five months.

In the meantime, Yellow Media proved incapable of replacing the lost print dollars with new digital revenues. Many traditional media companies have been struggling as they transition into a fiercely competitive digital world with no automatic repeat business. But then, they didn't promise as Mr. Tellier did to keep on churning out fat payouts. Each time reality caught up with Mr. Tellier and the company cut its payouts – this happened four times – the company's stock sank like a yellow submarine until it eventually was worth just pennies.

One can see how it would have been difficult for Yellow Media's board to repudiate Mr. Tellier. They had signed off on each and every one of his acquisitions. They also closed their eyes on some questionable accounting.

In 2009, while imposing a pay freeze to top executives, they created a new stock-options program to reward them for improved results. Options were to be given out if Yellow Media's operating profit reached $895-million before subtracting the one-time costs associated with the conversion from an income trust into a traditional corporation.

Yellow Media barely hit the target, but only because it had $48.5-million in conversion and associated costs. Executives got their extra options. However, Yellow Media's conversion costs were 20 times more expensive than the average cost for 16 former income trusts (including Aeroplan and Cineplex) and six times higher than the second most costly conversion ever done in Canada. This brought the analyst who made the finding to describe Yellow Media's conversion costs as "inexplicably off the chart."

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Yellow Media's board has been almost completely revamped since that time.

Only two of the company's nine directors survived the restructuring, including Marc Tellier, whose continued role as a director "has yet to be determined," said Yellow Media spokesperson Fiona Story. Yet the new board now appears to back one of the previous board's most controversial decisions.

Thursday's press release states that Mr. Tellier will leave Yellow Media "no later than Aug. 15, 2013." And that August date appears to be no accident. Under changes made in 2010 to "retain" Mr. Tellier, who was still then considered a "key executive," his pension plan was made even more generous to ensure he would work for Yellow Media "at least until August, 2013," when he will have turned 45. "The amendment now allows Mr. Tellier to receive partial benefits provided he retires from YPG on or after age 45," company documents state.

Instead of losing those extra benefits (he gets a credit of 1.5 years of pensionable service for each year of service, for instance), about a third of the supplemented pension is to be vested when Mr. Tellier reaches 45 and is payable when he turns 65.

Mr. Tellier could also earn three extra years of service if he was "terminated without cause."

What will be the total tab for Mr. Tellier's departure? Ms. Story says Yellow Media will not disclose his severance package until this year's proxy statement or even next year's proxy statement is published. Neither chairman Robert MacLellan nor Mr. Tellier were available for comment.

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One thing is certain, however. The directors' complacency has been extremely costly. Which raises the question: Where were the activist investors when Yellow Media needed them?

Sophie Cousineau is The Globe and Mail’s chief Quebec correspondent. She has been working as a journalist for more than 20 years, and was La Presse’s business columnist prior to joining the Globe in 2012. Ms. Cousineau earned a master’s degree in journalism from the University of Illinois and a bachelor’s degree in economics and political science from McGill University. More

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